Standing Committee A

[Mr. Alan Hurst in the Chair]

Crime (International Co-operation) Bill [Lords]

Clause 32 - Customer information

Nick Hawkins: I beg to move amendment No. 146, in
clause 32, page 19, line 8, after 'him', insert 'on reasonable grounds'.

Alan Hurst: With this it will be convenient to discuss the following:
 Amendment No. 147, in 
clause 32, page 19, line 25, at end insert 
 'subject to being given reasonable notice of the order by the applicant'.
 Amendment No. 87A, in 
clause 32, page 19, line 22, at end insert— 
 '( ) No customer information order shall be issued unless— 
 (a) the authority referred to in subsection (2) has included in its application a full explanation of its reasons behind the application, and 
 (b) the Secretary of State is satisfied that those reasons are sufficient to justify the issuing of the customer information order.'.

Nick Hawkins: I welcome you back to the Chair, Mr. Hurst. May I give a particularly warm welcome to the new Minister, without wishing to leave out the long-serving Minister, the Under-Secretary of State for Transport, who is sitting next to her? I have personal knowledge that the newly appointed Minister, whom I congratulate warmly, is tactful and diplomatic. I am sure that all Committee members will benefit from her wisdom. She could show that by accepting Opposition amendments Nos. 146, 147 and 87A. [Hon. Members: Oh.] Well, it is always worth trying, Mr. Hurst.
 We are seeking, in three different ways, to introduce a reasonableness test. Amendment No. 146 would introduce the requirement of such a test on the Secretary of State. Although I am not casting aspersions on any particular Secretary of State, they sometimes behave unreasonably. Some might say that the present Home Secretary has been unreasonable about judges. No doubt that was one of the things that led to the chaos of the reshuffle that was and was not, and which abolished the Lord Chancellor and then did not. It would be helpful if there were a requirement in the Bill for the Secretary of State to act reasonably. It surely cannot be unreasonable for a reasonableness test to be introduced into this chapter. 
 Amendment No. 147 would introduce a different sort of reasonableness test. The financial institution that may be affected would need reasonable notice that an order had been made. Amendment No. 87A accompanies Nos. 146 and 147 and backs up the 
 requirement for the reasonableness, appropriateness and, in this instance, sufficiency, that should be included in the Bill. There is a need for a full explanation of the reasons for the application and for the Secretary of State to be satisfied that those reasons are sufficient to justify the order being made. In summary, the three amendments together will make clause 32 more reasonable and balanced. 
 Committee members will be aware, although perhaps the new Minister may not, that I was a banking lawyer before I entered the House of Commons. It is important to balance the needs of privacy in relation to customer information and those of the state. We will deal later with some of the more draconian measures that the Government are putting forward. The Minister will talk about the overriding need to tackle crime, which the Opposition Benches accept. However, a balance must be struck between the interests of financial institutions and their customers, the need for traditional confidentiality and privacy and the state's need to tackle crime. Our amendments will strike that balance more clearly and appropriately.

David Heath: I welcome you to the Committee this morning, Mr. Hurst, and I extend a warm welcome to the new Minister. She has new responsibilities, and I hope that she will have the opportunity to read back over the previous sittings of this Committee because important questions were put to her predecessor that we were hoping for replies to: I hope that they will not get lost in the change-over, as they are crucial to the Bill's proceedings on Report. I ask her—through you, Mr. Hurst—that particular note be taken of the assurances that were given by the hon. Member for Coventry, North-East (Mr. Ainsworth), who is now Deputy Chief Whip and Treasurer of Her Majesty's Household, to consider particular aspects of what we have been discussing in the previous two sittings.
 I return to the group of amendments that we are addressing. It is important that we establish what the procedure will be, because it is intrusive as it stands. I am sure that the tests of reasonableness are correct. The hon. Member for Surrey Heath (Mr. Hawkins) has not entirely persuaded me about amendment No. 146, which may be otiose in establishing whether the Secretary of State has acted reasonably in believing somebody to be subject to an investigation. 
 Amendment No. 87A is far more important because what is crucial is whether the authority that is issuing the request has given a full explanation for the reasons behind the application so that the Secretary of State can apply discretion properly. That was part of the framework agreement: it was expressly required as part of the procedures, but it is not in the Bill. The Minister may say that that is implicit in making a proper request: I disagree. The amendment of the hon. Member for Surrey Heath makes it much clearer what must accompany the request in terms of accessory information. The Minister might not be conducive to accepting amendment No. 146, but I hope that she will seriously consider amendment No. 87A and the form in which a request should be received under the framework in order to make it a legitimate request for 
 an investigation that has civil rights implications and should only be done on clear authority and with clear justification.

Bill Wiggin: I also welcome the Minister to her new post. It is sad that the brilliance of her appointment has been overshadowed by the negative headlines about others.
 The addition of ''on reasonable grounds'' is not significantly different from the ambition of the Government when they added 
''subject to an investigation by a participating country into serious criminal conduct.''
 However, having worked in the banking environment, I am aware of the great pressure on people in that industry to produce information on customers. Such a competitive edge is required to compete in that industry that, unless the request for information was reasonable, it would be wrong to ignore this amendment. The information that is often asked of people in the banking sector can be trivial and it can be presented in such a way that it would appear to be used as evidence against the employee of the bank. Therefore, we must do everything that we can to avoid the pointless wasting of time that, unless the requests were reasonable, this could lead to. 
 There is also the issue of privacy and data protection. In this country, where data is carefully protected, it would not be so worrying to release information of a sensitive nature, particularly if it was constructive, in the way that I believe the Government would wish it to be, as that is written in the Bill. However, in countries that are less careful with their data, the problem would be worrying. It undermines the privacy of our banking sector. We need to approach the problem with great caution. There are many other reasons why ''reasonable'' would be a helpful, sensitive and sensible addition to the Bill.

Caroline Flint: I welcome you to the Chair, Mr. Hurst. I hope that you treat me kindly. I thank Opposition Members for their kind words. Having served recently as a Back Bencher on the Committee that considered the Anti-social Behaviour Bill, I realise what a hard time some of us gave my predecessor. My hon. Friend the Member for Nottingham, East (Mr. Heppell) was the Whip in that Committee. I note that a few members of this Committee were members of that Committee, and I look forward to working with them during the next few sittings.
 I wish to reassure members of the Committee, especially the hon. Member for Somerset and Frome (Mr. Heath), that more information will be forthcoming, as my predecessor said. The Bill is very much about tackling crime, how technology has advanced, and how crime can go beyond the boundaries of nations and continents. I understand that there is general agreement that those who pursue criminals must have access to information that will, we hope, lead to the conviction of those criminals. 
 I shall deal first with amendments Nos. 146 and 87A, as they both relate to the Secretary of State's discretion to act on a request. Amendment No. 146 is unnecessary. Subsection (1) relates only to the initial decision whether the request is valid. By that, I mean that it is from an appropriate body, it is for customer information in relation to a person subject to an investigation of serious criminal conduct and it is from a participating country. It is the starting point. The clause applies only if those initial tests are met. If any of them are not met, the rest of the clause does not apply. 
 The grounds on which the Secretary of State will base his decision will be the content of the request itself. If that provides adequate grounds, the clause will apply and he will then use his discretion under subsection (3) about whether to assist in a particular case. If the request does not contain sufficient information for it to seem to him that there is such an investigation concerning the person, he will decline assistance. There is no added value in including ''on reasonable grounds'' under subsection (1). The grounds are simply that the request must meet the basic requirements that I have already explained. 
 Amendment No. 87A deals with the next step in the proceedings and would introduce an extra hurdle to subsection (4). By requiring a ''full explanation'' of the reasons behind the request, the amendment refers in general terms to the conditions in article 1(4) of the protocol. We are worried about the effect of the amendment and consider that the clause, as drafted, provides proper safeguards against inappropriate requests or fishing expeditions, while still enabling us to meet our international obligations. 
 When considering whether to accede to a request, the Secretary of State must initially be satisfied that the precondition in subsection (1) is met, as I explained when speaking to the previous amendment. If that condition is not met, subsection (4) does not apply; thus subsection (1) works as an enabling provision, the starting point in considering a request for customer information. At the next step, the Secretary of State has a general discretion whether to act in a particular case. The use of ''may'' in subsection (3) reinforces that point. Furthermore, a judge must be satisfied about all the matters set out in clause 33(1) before exercising his or her discretion to make an order. Those requirements are that the person specified in the application is subject to an investigation, that the investigation concerns serious criminal conduct, that it would constitute an offence here, and that the order is sought for the purposes of the investigation. The grounds on which an investigation for information will take place must be clearly stated. 
 The Secretary of State's discretion to act on a request from a European Union country will be exercised with the protocol requirements in mind. Our obligation to respond to requests for banking information extends only to requests from countries that have implemented the protocol themselves. That is yet another safeguard to ensure a level playing field for the standards that we expect for the protocol to be implemented. To be valid, requests must therefore comply with all of article 1 of the protocol. If the 
 request is invalid, the Secretary of State will not act on it. We consider that the general discretion conferred on the Secretary of State in subsection (3) is preferable to a clause that explicitly states how the Secretary of State must act when a request is received in a particular form. It enables us to apply the article 1 conditions and to exercise a general discretion. 
 The requirement for 
''a full explanation of its reasons''
 could be interpreted as going beyond what we are entitled to demand from the requesting authority under article 1(4), and be considered a breach of our obligations under the protocol. Article 1(4) only lists certain requirements, and makes no requirement for a full explanation. We do not consider that explicitly listing article 1(4) conditions is appropriate. I am happy to stress that the Secretary of State's discretion will be exercised with the protocol requirements in mind when he is considering requests made by another EU country. 
 Amendment No. 147 would require a financial institution to provide information under a customer information order, subject to being given reasonable notice of the order. That is unnecessary. The financial institution is obliged to provide the information specified, in the manner and within the time required. Under clause 34(1), it is guilty of a penalty if it fails to comply without reasonable excuse. If an attempt was made to instigate proceedings against an institution that failed to comply with an order within a time scale that it considered unreasonable, it could cite that unreasonable deadline as a reasonable excuse for its non-compliance. 
 The time limit for compliance will vary from case to case. The person applying the order will take into account all relevant factors, such as the urgency of the request—for example, if a trial date has been set and the information constitutes key evidence—and the complexity of the order. It would also be open to them to take into account the size of the financial institution, if it considered that relevant to the case. Some financial institutions might be of a size that allows them to comply more quickly than others. 
 We do not consider that the amendment adds anything of substance to clause 32. We are satisfied that financial institutions are adequately protected against unreasonable demands. Finally, the drafting of subsection (5) is consistent with the approach in section 363(6) of the Proceeds of Crime Act 2002.

Nick Hawkins: Even though it is obvious that the Government will resist our amendments, I am grateful to the Minister for her comments.
 I agree with the hon. Member for Somerton and Frome that one of the amendments in this group of three is more important than the other two. I am grateful to my hon. Friend the Member for Leominster (Mr. Wiggin) for his support, because he, like me, has worked at the sharp end of the banking industry and knows that such matters are important. It is important from the Government's point of view not to place any unreasonable demands on financial institutions, because, of course, the Government need financial institutions to co-operate with them—I see the 
 Minister nod in acknowledgement—so that they can work together to defeat international crime. 
 I was tempted to press at least one of the amendments to the vote, just to reinforce the point that Conservative Members feel strongly about these matters, but we shall reach some equally important matters later, when I can press the Minister again.

Bill Wiggin: Before my hon. Friend draws his comments to a conclusion, may I ask whether he feels, as I do, that the Minister's reply gave no consideration to the business side of evidence gathering? The whole Committee would agree on wanting a reduction in international crime and everyone to play their part. However, a request has a financial implication for an institution—it is not something about which someone will simply say, ''Ah! This is easy. I shall provide the information without any trouble.'' We are talking about a lot of work for a lot of people who are also trying to earn a living and pay their taxes.

Nick Hawkins: My hon. Friend is right. He, like me, has seen the consequences and the amount of work that the requests used to cause, even under existing law. I was on the main compliance board and was group legal adviser for the last PLC for which I worked, so I saw at particularly close quarters the implications of checking the work so that any response requested by Government could be provided fully and accurately.

Caroline Flint: We have consulted widely in the banking industry on all the provisions. The Government—as much as any Committee member—do not want the provision to be used inappropriately, thereby leading to undue cost and time spent. The requirements in clause 32 mean that frivolous requests will not be acted on. All EU member states are bound by data protection regulations and data protection law does and will apply.

Nick Hawkins: I am grateful for the Minister's reassurances. It is helpful that those are on the record, so that senior executives in financial institutions may refer to the Hansard report of the proceedings. If a Minister says something on the record, that can be relied on later if any relevant matters ever have to be discussed in court. However, when she talks about data protection, she must be aware of clause 32(7), which states:
''A customer information order has effect in spite of any restriction on the disclosure of information (however imposed).''
 I shall not press the new Minister too hard on that point some 72 hours into her job, but will she reflect on the phraseology of that subsection in the light of what she has just said about data protection? I understand that the subsection would override any data protection restrictions. Perhaps she will discuss that with officials and write to me and other Committee members. I do not know whether the hon. Member for Somerton and Frome interprets the subsection in the same way, but it can only have that meaning—I see the hon. Gentleman nodding. Perhaps the Minister will reflect further on that matter with officials. 
 It is helpful that what the Minister said is on the record. The debate, too, has been helpful. I beg to ask leave to withdraw the amendment. 
 Amendment, by leave, withdrawn.

Nick Hawkins: I beg to move amendment No. 56, in
clause 32, page 19, line 14, after 'or', insert 'to'.

Alan Hurst: With this it will be convenient to discuss the following:
 Amendment No. 57, in 
clause 32, page 19, line 16, after 'or', insert 'to'.

Nick Hawkins: The amendments are brief. At first sight, it might appear that we are simply going for grammatical correctness by inserting the word ''to'' in a couple of places. However, as you, Mr. Hurst, the Minister and the Committee may have appreciated, the amendments are more significant than that. They would mean that under the Bill only senior police officers, rather than the Secretary of State, could direct constables. I shall listen with interest to the Minister's response. I shall not take up any more of the Committee's time except to say that rather than the Secretary of State telling constables directly that they should be taking action, there should be a police management decision.

David Heath: The Minister can ingratiate herself with me in two ways. First, she should pronounce my constituency correctly. I have to say that no Minister has yet managed to do that within three months of taking office, so I shall give her a little leeway.

Caroline Flint: Would the hon. Gentleman say the name of his constituency out loud, so I can hear it correctly and ensure that I say it correctly in future?

David Heath: I am happy to oblige: ''Somertun'', not Somerset, and ''Frume''.
 Secondly, the Minister should accept self-evidently correct amendments tabled by Opposition parties when they improve both the syntax and intelligibility of a clause. The hon. Member for Surrey Heath is right in saying that there is an ambiguity that can be corrected by getting the syntax right. 
 I have a serious question to ask. May I assume that there is nothing in the clause that would prevent a request going through the National Criminal Intelligence Service? It is not mentioned by name, but is obviously a major conduit for a lot of the requests. Is that encompassed in the terms ''senior police officer'' and ''constable''?

Caroline Flint: I shall try to explain why we consider it appropriate for constables and Customs officers to apply for customer information orders under the direction of a senior officer. I should make it clear that it would not be the Secretary of State who instructed constables; the instructions would come from senior officers.
 The constable or Customs officer may apply for a customer information order only on the instruction of a senior officer. He cannot make an application off his own bat. The senior officer will always be accountable for the decision to seek the order, but we think that he 
 will not have the time to go to court to make the application in person. Requiring applications for CIOs to be made always by a senior officer would impose a disproportionate burden.

David Heath: The Minister is misdirecting her comments; no one is arguing that it should always be a senior officer who has to make the application. My point is that, because of the wording of the clause, the subject of the verb ''arrange'' may be taken to be the Secretary of State, and no one wants the Secretary of State to have to arrange for a constable to apply for the order. We want a senior police officer to do that. That, I think, was the argument made by the hon. Member for Surrey Heath.

Caroline Flint: I can assure the hon. Gentleman that what he says is the case; we would not require the Secretary of State to direct a constable. That would be up to a senior officer.

Nick Hawkins: The Minister has supported the hon. Member for Somerton and Frome and me. If that is what she seeks to achieve, it would be wise for the Government to accept the amendment. The matter would then be absolutely clear and the grammar and syntax would be correct. I hope that she will reflect on that with officials. I shall not waste the Committee's time by pursuing the matter now, because it is only a small point. However, I am sure that the Minister, diligent as I know she will be in carrying out her duties, will chat to officials about the grammar and syntax. If at a later stage she tables a small Government amendment to the same effect as ours, she will have achieved what she says she wants. I beg to ask leave to withdraw the amendment.
 Amendment, by leave, withdrawn.

Nick Hawkins: I beg to move amendment No. 88A, in
clause 32, page 19, line 33, at end insert—. 
 '(9) A ''participating country'' for the purposes of this section shall be defined as a European Union member state which has incorporated similar provisions in domestic law.'.
 The amendment makes a slightly more substantial point, in terms of the effectiveness of the Bill, than the previous one, which dealt with a small point. What we are saying through amendment No. 88A is that reciprocity is crucial. As my hon. Friend the Member for Leominster and I have made clear, the provisions of this part of the Bill will be quite onerous on financial institutions in this country. That onerous burden should only come into operation once we have reciprocity with other EU member states: when other EU countries have adopted similar provisions, it will be appropriate for the provisions that apply to UK financial institutions to come into force. 
 Too often in the past we have handicapped our own businesses. Albeit in pursuit of worthwhile aims—the tackling of international financial crime is undoubtedly worth while—we have loaded burden after burden on our institutions in a variety of fields, not just banking. However, many other EU countries have not imposed the same burdens on their industries; there has been an absence of reciprocity. 
 One could give a range of examples, but the one that I tend to use and that springs most easily to mind is the onerous burdens that were placed on our fishing industry. Those burdens helped the Spanish fishing industry, as at the time there were only half a dozen fishery protection officers and they were all based in Madrid, not in the fishing ports. That caused enormous angst among the fishermen of this country, because they felt that they were being held to every dot and comma of all kinds of EU regulations that had been gold-plated in Whitehall and imposed on UK law with criminal penalties attached. They were being inspected every minute of the day when they were in harbour, whereas their Spanish counterparts were carrying on ignoring all the agreements that their Government had signed up to but did not impose on Spanish fishermen. 
 Without overstating the case, I am anxious to ensure that a minor version of that does not happen in this respect. There is a genuine international mutual interest in tackling international financial crime, and Opposition Members want to aid that work, but we do not want the UK to be the only country that has these burdens imposed on its financial institutions. Given that the basis of the Bill is mutual legal assistance, it would be logical to say that this sort of provision is fine but there is no point in imposing it on our financial institutions until we can be certain that the same impositions will be put on institutions in other EU countries. That is an important point.

Caroline Flint: I take on board the hon. Gentleman's comments that if we are to be part of a reciprocal procedure, we want to ensure that other people abide by the same rules. That is fair and just. The Bill and the protocol from which it has come will ensure that that happens.
 The purpose of the amendment is to restrict the application of the provisions on customer information orders to countries which have implemented the protocol, but that is unnecessary because to make requests under the protocol, a country must have completed the necessary implementation procedures and notified the Council of the European Union accordingly. Until that time, they cannot make requests citing the protocol's provisions, nor do we have to assist them. The protocol creates the obligation to comply with requests and the arrangements are reciprocal, so the amendment is redundant. However, this debate allows us to discuss how important it is that all countries participate and apply equal standards. 
 Let me offer a little more detail. Clause 51(2) allows countries to be defined as participating countries. That mechanism allows different countries to be designated as participating countries for the purposes of different provisions of the Bill. A country participating in one provision will not automatically be a participating country for all the relevant provisions in part 1. That means that we can restrict the applications of some provisions of the Bill. 
 The provisions of chapter 4, to which the amendments relate, enable us to request and provide assistance in identifying and monitoring bank accounts. These forms of assistance are regulated for 
 the first time in the protocol to the MLA convention. We are under an obligation to provide those forms of assistance only to countries that are party to the protocol, and we have chosen as a matter of policy to restrict the application of chapter 4 to designated countries, rather than to give it general application. That restriction contrasts with our policy more generally on the provision of mutual legal assistance, whereby we do not require the existence of reciprocal arrangements as a condition for assisting. However, these new types of assistance are new and specialised and the amount of work that will be involved in executing such requests will be fairly substantial. We did not consider it appropriate to give the provisions general application when many countries will not be in a position to reciprocate. 
 Although we will initially apply the provisions only in respect of EU member states that have implemented the protocol, it is possible that in future the provisions could be extended to cover countries beyond the EU. A definition restricting applications to EU member states only would not be appropriate. We have previously given Norway and Iceland as examples, as we are aware that they are interested in fully participating in the protocol and we would be able to extend the provisions to them on the basis of their participation in Schengen. It is possible that there might in future be benefit in extending other mutual legal assistance agreements to cover such matters, but participation of countries outside the EU would be achieved only following consideration of an order by both Houses once such an agreement had been reached. 
 I hope that that reassures the hon. Member for Surrey Heath that we feel that the protocol has sufficient weight to ensure that we would have the right to turn down requests for information from anybody who did not meet the full scope of its requirements.

Nick Hawkins: I am pleased that we moved this amendment, because it has been helpful to hear what the Minister has said, and to have that on the record. I am not entirely reassured by her opening up the prospect of extending the categories beyond the EU, but I understand what she says about needing to help countries such as Norway and Iceland. I am sure that, in the light of the Minister's reassurances that are now on the record, great care will be taken before this operation is extended more widely—I certainly hope that that will be the case. It is helpful to have an explanation—stated by the Minister on the record—that there is some protection in the protocol. I beg to ask leave to withdraw the amendment.
 Amendment, by leave, withdrawn. 
 Clause 32 ordered to stand part of the Bill.

Clause 33 - Making, varying or discharging customer information orders

Nick Hawkins: I beg to move amendment No. 89, in
clause 33, page 20, line 3, leave out paragraph (a).

Alan Hurst: With this it will be convenient to discuss the following:
 Amendment No. 91, in 
clause 34, page 20, line 19, at end insert 'within the specified period'.
 Amendment No. 96, in 
clause 38, page 22, line 33, leave out paragraph (a).

Nick Hawkins: The amendments in this group run together. Amendment No. 96 to clause 38 effectively makes the same amendment for Scotland.
 Clause 33(3)(a) is too wide. We should never have a situation in which absolutely every financial institution can be included under the draconian measures of the clause. Amendment No. 91 would introduce a time limit, which would be a useful protection. 
 We can see the logic of stating in subsection (3)(b) that the application may specify a particular description or descriptions of financial institutions, and that, in subsection 3(c), a particular financial institution or institutions may be specified. However, to state that an application may specify all financial institution reinforces the point on which my hon. Friend the Member for Leominster was helpfully supporting me earlier. We are talking about onerous burdens in terms of the amount of work that will be created. Surely, it must be possible, when an application is being made, that those applying should be able to specify at the very least either a particular group or a description of financial institutions. The clause should not apply to the entire financial sector, as that is too wide. 
 The phrase ''financial institution'' is defined widely for the purposes of the Bill. We know that there has been huge expansion in recent years because of the success of the City of London and banking in the UK; we are one of the world's great financial centres. However, it is far too wide to allow an application to be made, albeit on worthy grounds, without the other side being heard by a judge in chambers—in other words, ex parte—which states that every financial institution in the whole of the UK must provide particular information. Although the amendment is small, it reflects a matter of concern. 
 I know from the people with whom I worked when I was group legal adviser for a large financial institution—I used to have meetings with those on the legal committee of the British Bankers Association—that this kind of all-embracing legislation causes problems. I hope that we will have the opportunity to cut down the breadth of the application and put the onus on those who are applying for the order. They should be able to specify either a financial institution or a group, and not the whole financial sector.

David Heath: I have great deal of sympathy with the hon. Gentleman's comments. It worries me that the classification of a request to all financial institutions has two effects: it creates a great deal of work for many people at inordinate cost; and it renders of less value the information that comes back.
 One of the facts that we know about financial investigation is that the amount of information that is coming in, mainly to the National Criminal 
 Intelligence Service, is vastly in excess of what it is successfully able to work its way through to good effect. Unless we shall have a doubling of the resources that are available—I literally mean doubling—to deal with such matters, I am not sure that useful information will be gained by an all-embracing request that covers every financial institution. 
 If the intelligence on which the request were based were so weak as not to narrow the scope from all financial institutions to a class of financial institutions, it seems that that intelligence would not pass the original test. It would not be a genuine request for information to enable an investigation to proceed. It would become much closer to a fishing expedition that seeks evidence when none is available. That worries me, too. I hope that the hon. Gentleman's words will be listened to with some care. No one wants to reduce the efficacy of the process. My argument is that the provision would increase the efficacy of the process by focusing it on certain classes of financial institutions. 
 We should not discount the implications for the industry, nor the investigations and work that will be required to comply with requests. If a customer information request is aimed at all financial institutions and one of them does not reply, it will be guilty of an offence under the Bill. That is inappropriate. Whether or not the institution has valuable information, it will be guilty of an offence. I do not want to overburden either the industry or investigating organisations in such a way that they cannot do the job that we want them to do effectively and at a reasonable cost. I hope that the hon. Lady will seriously consider the amendments.

Caroline Flint: We have had a good debate about customer information orders, not wasting time and not being frivolous. We discussed how good it is to be clear about the protocol and how it applies to all the countries taking part in accordance with the Secretary of State when making a decision to proceed. It is important to remind the Committee of that debate, because no one wants a situation in which resources are used unwisely, as the hon. Member for Somerton and Frome said. That will put a burden on those who are investigating, because they could not do anything with the information with which they were provided. There may be an occasion when an order has to specify all financial institutions. That would not happen in each case, but it would be given considerable consideration. We want the provision to be in the Bill, because there may be occasions when it is needed.

Bill Wiggin: Does the Minister have any examples in her notes of the type of situation in which all financial institutions would have to be included?

Caroline Flint: Let us consider a terrorism case, when no evidence points to an account at a particular bank, but the seriousness of the offence and the need to trace any account was such that we would consider that it justifies a search of all banks.

Bill Wiggin: The Minister specified a type of financial institution in her example. I am sure that, given the lack of more specific information, Conservative Members wholly agree that a situation of that seriousness would justify that example.
 However, she specified a type of institution. That is why the provision is an example of weak drafting.

Caroline Flint: I beg to differ. We envisage that such circumstances are likely to be unusual, but the provision is essential. The ability to target an order at all financial institutions is important on rare occasions. The Bill gives both the Secretary of State and the court discretion about whether or not to make an order. There are safeguards in the clause. The Secretary of State will consider whether a request meets the conditions of the protocol, and specifically whether he is satisfied that the requesting authority has demonstrated why it considers that the information is likely to be of substantial value to its investigation and has grounds for presuming that accounts are held there. If he is not satisfied with that and the request appears to be a fishing expedition, he can refuse it.
 The clause is also consistent with the 2002 Act, which contains the power to make an order specifying all financial institutions. If we can do that for overseas money laundering investigations, it is logical by extension to make similar provision in the Bill to enable us to do it for other serious crimes.

Nick Hawkins: The Minister will understand that we made the same point during the Proceeds of Crime Bill, on which I sat on the Opposition Benches. The provision is much too wide. The fact that that Government did not accept that does not mean that we are not going to make the same point again. Two wrongs do not make a right. The Government were wrong before on the 2002 Act, and they are wrong now.

Caroline Flint: We shall have to differ on that. It was correct to include the provision in the 2002 Act and, having considered other areas of serious crime that require access to information, it would be illogical not to pursue the same direction in the Bill. We stand by our argument during the passage of the 2002 Act. We need the clause to safeguard the occasional need to use the power.

David Heath: In what way does the Minister feel that if subsection (3)(a) were missing, paragraphs (b) and (c) would not cover all potential circumstances in which the power needed to be used? It would allow for particular descriptions of financial institutions, which could include all of them if that were necessary, but it would not suggest that that was a norm.

Caroline Flint: As I have said, we believe that referring to all financial institutions in the clause allows us to be clear, if and when a customer information order is requested, and it is also requested that the search should be wide-ranging. The provision will allow us the power to do that. We have included it in the Bill because it was, as I have said before, used in the 2002 Act and we feel that it should be re-used to make logical the Bill that we are passing. We might not be able to define a particular description. This is a catch-all provision that will ensure that we can enable requests appropriately.

Nick Hawkins: In a previous debate, the Minister put a great deal of stress on the fact that the Government consulted widely with the financial world and that they knew that it was supportive. However, the Minister
 cannot say that in relation to the amendment, because my noble Friend Viscount Bridgeman said in another place that the genesis of the amendment deleting paragraph (a) was based on
''the concern of the British Bankers' Association, which although strongly supportive of many parts of the Bill, is very concerned that an undue and excessive burden should not be placed on the financial community.''
 That is what we are saying. My noble Friend continued, saying: 
''Would that not be too burdensome in practice?''
 He added that the provision would 
''allow fishing expeditions by police authorities with no real direction, at huge financial cost to the banks, bearing in mind that the smaller the bank, the greater the proportionate burden on it''—[Official Report, 27 January 2003; Vol. 643, c. GC 127.]
 The Minister ought to reflect further, especially on the helpful point made by the hon. Member for Somerton and Frome, who said that the clause would not be weakened very much if paragraph (a) were removed. If paragraphs (b) and (c) were left, the clause would still be pretty wide, but there would not be the possibility of something incredibly burdensome. 
 I remind the Minister that we are talking about an ex parte application to a judge in chambers, in respect of which the financial institutions will not have the opportunity to attend and object. The application will be made in private at the insistence of the state, whenever that situation arises. We must be careful that the Government do not make the legislation too wide. 
 I shall not pursue the matter, but the Minister and her advisers must reflect further on the matter, because we could, and perhaps should, return to it later, given that the Government are not giving any ground on a point on which we strongly feel that they have gone too wide.

Bill Wiggin: Perhaps I should have spoken earlier on the issue. I have a great deal of sympathy with the Minister; if I were in her position, I think that I would defend the brief in just as stalwart a fashion.
 I also appreciated the argument advanced by the hon. Member for Somerton and Frome, because paragraphs (b) and (c) cover the gamut of financial institutions—and paragraph (a) seeks to cover them, too. We have an impasse in some senses, because all financial institutions can be picked up. The difference, and the Minister put it well, is that the provision requires us to think about the process, rather than use a broad-brush stroke. It is that extra thinking that we need in our legal system, because it protects not only the smaller financial institutions, but the sensitive institutions, particularly in our country. Such institutions are price-sensitive and—

Alan Hurst: Order. The hon. Gentleman's intervention is too long.

Nick Hawkins: I am grateful to my hon. Friend the Member for Leominster, because I understand that he, like me, brings past expertise to the matter. As my hon. Friend says, the Government and the Opposition are at an impasse. I shall not pursue the matter today, but tell the Minister seriously that we may have to
 return to it later, and I hope that she will reflect on the issue. I beg to ask leave to withdraw the amendment.
 Amendment, by leave, withdrawn.

Nick Hawkins: I beg to move amendment No. 90, in
clause 33, page 20, line 11, leave out paragraph (c).

Alan Hurst: With this it will be convenient to discuss the following:
 Amendment No. 92, in 
clause 35, page 20, line 40, leave out from 'apply' to 'for' in line 41.
 Amendment No. 95, in 
clause 36, page 21, line 31, leave out paragraph (c).

Nick Hawkins: The amendments address a point that is, to some extent, similar to one that we dealt with a few minutes ago in relation to the Secretary of State's powers. Amendment No. 90 would amend clause 33, and amendments Nos. 92 and 95 would amend clauses 35 and 36 respectively to the same effect. We are saying that it should be a senior police officer who takes a stance under the clauses, and want to delete clause 33(4)(c), which says:
''a constable authorised by a senior police officer to make the application''.
 It is perfectly reasonable for senior police officers, but not mere constables, to deal with the matters in the clauses. We are talking about quite significant issues. As I said earlier, we are talking about a draconian provision; surely the power should be restricted to senior officers. I hope that the Minister will understand that small but important point. I will listen with interest to what she has to say.

Caroline Flint: The amendments would prevent a constable from being able to apply for customer information orders or account monitoring orders on the instruction of a senior officer. The senior officer would have to apply for the order in person, whatever the circumstances of the case.
 Under the present drafting, the constable can apply only for customer information orders or account monitoring orders on the instruction of a senior officer; he cannot make an application off his own bat. The senior officer will always be accountable for the decision to seek the order, but will not have time to go to court to make the application in person. Requiring applications for CIOs or AMOs always to be made by a senior officer would impose a disproportionate burden on the police and would not be a sensible use of senior officers' time. Clause 46 states that a senior police officer must be of at least superintendent rank. 
 The drafting of the Bill follows existing practice, as constables already have similar powers in relation to money laundering investigations under section 378 of the Proceeds of Crime Act 2002, which defines constables as ''appropriate officers''. Furthermore, it is likely that the request for an order will arise from an ongoing investigation, of which it is likely that the constable, not the senior officer, will have in-depth knowledge. If a case arises in which it is appropriate 
 for a senior officer to make the application, the present drafting allows the flexibility for that to happen.

David Heath: Will the Minister confirm what I believe to be the case, which is that the constable referred to does not necessarily mean a person holding the rank of constable, but merely a person holding the office of constable, that is to say, to any officer up to the rank of superintendent?

Caroline Flint: I can confirm that that is correct.
 Given that we think that it is right that a constable should be able to apply for an order on the authorisation of a senior officer, it follows that they should also be able to make an application to discharge or vary an order. An order may be discharged or varied if, for example, the requesting authority no longer requires the information or is able to narrow down the banks from which information is sought—possibly on the basis of additional information obtained from other aspects of its domestic investigation. 
 This is about ensuring that there is the safeguard that a senior officer authorises the instruction: we do not want to delay investigations by creating a bureaucratic and time-consuming process.

Nick Hawkins: I hear what the Minister says, and I will not pursue the matter further today. We wanted the Minister to confirm on the record what the position was, and she has done that. Therefore, at this stage, I beg to ask leave to withdraw the amendment.
 Amendment, by leave, withdrawn. 
 Clause 33 ordered to stand part of the Bill.

Clause 34 - Offences

Question proposed, That the clause stand part of the Bill.

Nick Hawkins: I do not want to take up too much of the Committee's time, but when I was researching this part of the Bill again last night, it occurred to me that, with regard to this clause, I should have tabled an identical amendment to amendment No 148, which I tabled to a later counterpart clause—clause 39. I simply wanted to put that on the record, so that the Minister can see that I was inadvertent in not doing so. When we come to discuss amendment No. 148 to clause 39, we will be able to discuss similar issues to some that apply to clause 34. I do not seek a reply from the Minister on that at this stage.
 Question put and agreed to. 
 Clause 34 ordered to stand part of the Bill.

Clause 35 - Account information

Nick Hawkins: I beg to move amendment No. 93, in
clause 35, page 21, line 9, leave out subsection (6).
 The purpose of the amendment is to delete subsection (6), which states: 
''An account monitoring order has effect in spite of any restriction on the disclosure of information (however imposed).''
 This goes back to the point that we were discussing earlier, when I said to the hon. Member for Somerton and Frome and the Minister, when she was suggesting that there was some kind or protection in the Data Protection Act 1998, that I do not think that it does that. 
 In relation to this part of the Bill, this is the occasion when we say that if subsection (6) were to stand, it would be too wide. There ought to be protections of the customer's privacy. I hope that the Minister understands that we wish to probe this matter. Members on the Opposition Benches would be interested to hear what she has to say about protection of customer privacy. The significance of that is that in this country the privacy of banking customers has always been sacrosanct. There are understandable reasons why, in trying to tackle international financial crime, the Government have to infringe on that traditional privacy to some extent, but we do not want them to be able to do so too widely, and this subsection goes too wide. I hope that the Minister understands that a balance must be struck. We want to strike it differently.

Caroline Flint: On the account monitoring order, various procedures would have been necessary to reach the point where such an order would be sought. We have discussed serious criminal investigations.
 As the hon. Member for Surrey Heath said, clause 35(6) states that an account monitoring order 
''has effect in spite of any restriction on the disclosure of information (however imposed).''
 That provision is replicated in clause 40 for account monitoring orders in Scotland, and in clauses 32 and 37 for customer information orders. It directly replicates sections 368, 374, 402 and 407 of the Proceeds of Crime Act 2002, which makes identical provision in relation to customer information orders and account monitoring orders made under it. 
 The purpose of this provision is to require a financial institution to provide the information specified in the order: requirements for information made under the powers of investigation take precedence in spite of any restriction on the disclosure of information. Banks are therefore able and required to breach customer confidentiality and provide the requested information to the court in response to a lawfully made order. 
 The provision is necessary because otherwise financial institutions could use customer confidentiality as a reason not to accede to customer information or account monitoring orders. That would make such measures weak investigative tools and frustrate the purposes of the protocol. 
 Customer information orders are compatible with the European convention on human rights. Section 6(1) of the Human Rights Act 1998 imposes an obligation on courts to comply with the convention rights. In exercising its discretion in making an order, a court has to consider its obligations under the 1998 Act and be satisfied that an order is lawful in each case. The 1998 Act applies to all legislation, and ECHR rights do not need repetition in Bills to take effect. The obligation on a bank to disclose 
 information as a result of a lawfully made court order will not contravene the ECHR. Unless the provision goes ahead, the reason for having the protocol and the powers in the Bill in the first place will be frustrated.

Nick Hawkins: I hear what the Minister says and I shall not pursue the matter further this morning. It has been helpful to have her remarks on the record. At this stage, I beg to ask leave to withdraw the amendment.
 Amendment, by leave, withdrawn. 
 Clause 35 ordered to stand part of the Bill.

Clause 36 - Making, varying or discharging account monitoring orders

Nick Hawkins: I beg to move amendment No. 94, in
clause 36, page 21, line 17, after 'into', insert 'serious'.

Alan Hurst: With this it will be convenient to discuss the following:
 Amendment No. 97, in 
clause 41, page 23, line 12, after 'into', insert 'serious'.
 Amendment No. 98, in 
clause 44, page 26, line 4, at end insert 'serious'.
 Amendment No. 99, in 
clause 44, page 26, line 12, after 'into', insert 'serious'.

Nick Hawkins: Amendments Nos. 94 and 97 go together, because amendment No. 97 would have the same effect on clause 41 for Scotland as amendment No. 94 would have on clause 36. Amendments Nos. 98 and 99 would have the same effect on clause 44.
 Opposition Members suggest that the powers should apply only to investigations into serious criminal conduct. An important point is involved. A great deal of criminal conduct is low level. Although it is still crime and still important, and nothing that I say will suggest that it should not be investigated, we are talking about a quite serious erosion of customers' privacy and the banker-customer relationship of privacy and confidentiality. That should not be eroded unless the criminal conduct being investigated is serious. 
 We all understand that, if there is major international financial fraud, there has to be a way in which the state has power to look into customers' accounts. However, we do not want the Bill to become a state snooper's charter. That goes back to the point made by my noble Friend Viscount Bridgeman in the debate in another place to which I referred earlier. We want to ensure that there cannot be massive fishing expeditions by the forces of the state. We want to support the work of the police, but the way in which we can protect the traditional banker-customer relationship of privacy and confidentiality is by ensuring that it is eroded or impinged on by the Bill only if serious criminal conduct is being investigated. That is why we say that it would be an important protection to insert the word ''serious''. 
 I hope that the Minister will not resist the amendment, because it would provide clarification in the Bill to keep the balance right and a sense of 
 proportionality. The Minister's predecessors as Home Office Ministers were often given briefs that said, ''We need to keep a sense of proportion.'' Proportionality has been a buzzword for Ministers in this Government. Opposition Members say that if the word ''serious'' were inserted in the Bill as a restriction, so that an investigation could take place only when serious criminal conduct was being examined, a sense of proportion would be kept. As I said, I hope that the Minister will accept the amendment.

Caroline Flint: This group of amendments would impose a requirement that requests for account monitoring orders be limited to investigations into serious criminal conduct. Such conduct is defined in clause 46(3). That is included to provide a definition for the serious forms of criminality specified in article 1(3) of the protocol.
 During negotiation of the protocol, it was recognised that requests to trace accounts would place significant demands on the resources of banks in countries without central registers of accounts and that there was therefore a need for proportionality between the crime in question and the measure requested. The protocol explicitly states that the obligation to assist under article 1 is limited to those cases that we have for simplicity described as those involving serious criminal conduct. 
 However, a parallel restriction in relation to account monitoring is not appropriate. Requests for monitoring will be targeted at an already identified account, so they will not place such a burden on banks. Also, we can already provide historical details of activity in identified accounts in response to overseas requests, even without the new legislation. The article does not oblige us to agree to all account monitoring requests and the clauses are drafted so that we can keep a degree of discretion. We are obliged only to assist in accordance with our international obligation. Therefore we can impose any restrictions upon provision of the assistance provided that they are not contrary to that obligation. Account monitoring requests will be subject to general considerations, such as proportionality, and the Secretary of State may refuse to execute the request if he does not think that monitoring of an account is appropriate. In our view the present drafting maintains sufficient discretion while still ensuring that we can meet our international obligations, and enables us to request assistance in a wide range of circumstances.

Nick Hawkins: I was slightly surprised not to hear the hon. Member for Somerton and Frome speak on the amendment, not least because his noble and learned Friend Lord Goodhart initiated some of the debates in another place. Perhaps the Liberal Democrats have decided this morning that they will not contribute.

David Heath: Is it not possible that the hon. Gentleman's argument was sufficiently adequate for it not to be necessary for me to speak?

Nick Hawkins: I am grateful to the hon. Gentleman, and if that is the case, I am flattered.
 The Minister has reassured us. There has been quite a lot of debate on the matter, involving not only Lord Goodhart, but a number of my noble Friends, including Viscount Bridgeman and Lord Renton. There is an important point to be made, but I hear what the Minister says about the fact that we are discussing account monitoring of an already identified account. In the light of that, I do not seek to pursue the argument again today. I beg to ask leave to withdraw the amendment. 
 Amendment, by leave, withdrawn. 
 Clause 36 ordered to stand part of the Bill. 
 Clauses 37 and 38 ordered to stand part of the Bill.

Clause 39 - Offences

Nick Hawkins: I beg to move amendment No. 148, in
clause 39, page 23, line 12, at end insert 
 'but 
 (c) for the avoidance of doubt, if a member of staff of the financial institution passes on a statement which turns out on later analysis to be false or to have given a misleading impression, but this has been caused merely by negligence or inadvertence the financial institution shall not be guilty of an offence'.
 We have now reached the amendment that I mentioned when I spoke briefly in the stand part debate on clause 34, during what I suppose was almost a point of order. I reinforce the point that the amendment should probably apply to both clauses 34 and 39, but that is my fault. 
 The amendment would insert an avoidance of doubt provision into the Bill. It is clear that there could be grounds for a criminal offence if a financial institution or its staff deliberately tried to mislead the prosecuting authorities or acted recklessly by providing incorrect information. However, it is important to make it absolutely clear in the Bill that mere carelessness will not lead to criminal prosecutions of, in some cases, quite junior staff. 
Stephen Hesford (Wirral, West) rose—

Nick Hawkins: I will give way to the hon. Gentleman in a moment.
 My hon. Friend the Member for Leominster and others who have worked in the banking industry as lawyers or in any other capacity will know that much of the gathering of information about individual accounts is necessarily undertaken by relatively junior staff. We do not want those people worrying about facing criminal prosecution if they make a genuine error. I am sure that the Minister will say, ''Of course we would not prosecute if it was simply an error.'' However, banking matters are complex, and it is often difficult to establish the basis for an error. Prosecution would be acceptable only if it could be established that someone had either deliberately set out to mislead or been reckless as to whether they did so. 
Mr. Wiggin indicated assent.

Nick Hawkins: I am glad to see that my hon. Friend the Member for Leominster nods.

Stephen Hesford: The hon. Gentleman will recall, as I do, our consideration of the Proceeds of Crime Bill. He revisits the scene of a crime that we in Government thought that the Opposition were committing on that Bill. If clauses such as this had been inserted into the Proceeds of Crime Bill, which is now operating successfully, they would have sought to water down their effect. The current situation is the same—the amendment would water down the effect of the Bill, and I ask my hon. Friend the Minister to resist it.

Nick Hawkins: The hon. Gentleman is right—he, I and others considered that Bill, including my hon. Friend the Member for Beaconsfield (Mr. Grieve) and the hon. Member for Glasgow, Pollok (Mr. Davidson), who enlivened the proceedings. He is right that we had similar discussions, but I did not agree with him then and I do not agree with him now. There must be a sense of balance. We are trying not to water down legislation, but to provide the sort of protection that is needed by relatively junior employees of banking institutions.
 From the discussions that I have as deputy chairman of the all-party group on insurance and financial services, I know that there is great concern among those who lead the trade unions in the banking sector about such legislation. The cross-party officers of the all-party group recently held a working dinner with the leadership of all the unions in the sector, and all expressed concerns about the way in which legislation might affect relatively junior members of staff, if some sense of proportionality was not maintained. That is why I tabled the amendment. 
 The hon. Member for Wirral, West (Stephen Hesford) and I both have legal qualifications. When studying criminal law, he will have been taught about the difference between someone who has a criminal mind—mens rea—and someone who has not. One of the basic principles underlying most criminal law is that if someone is merely careless or negligent, they are not committing a criminal offence. For the purposes of most criminal offences, there must be deliberation or recklessness, although there are some exceptions. 
 We are discussing the introduction of new criminal offences that can affect financial institutions and members of their staff, and our contention is that a financial institution should not be convicted of a new criminal offence, if the mistake that has been made is careless or negligent, although we can accept prosecution if the action was deliberate or reckless. The provision goes too far. I do not think that we are watering the clause down. I hope that the Minister will reflect carefully on the fact that we are trying to introduce into the legislation the basic principles that underlie most of our criminal law.

David Heath: Let me bring to bear all the legal ignorance that I can muster. The point that the hon. Gentleman made about negligence or inadvertence is a good one. On the face of it, that appears to be covered by the words that describe the offence, because subsection (3)(a) requires that the statement must be known
''to be false or misleading in a material particular'',
 or that it has been ''recklessly'' made. 
 My concern is the corporate offence that will be established by the clause. I want to know how one establishes mens rea in respect of an institution, and I hope that someone who is more of a legal mind than me can explain it. What is meant by ''the institution''? How does an institution, rather than a responsible individual in that institution, know that something is false or misleading? How is an institution ''reckless'' other than when the directors, the financial director or someone responsible for the offence are reckless? 
 That seems to be a more cogent problem in prosecuting the offence, and I would hate the clause to be meaningless. I am sure that the Minister has specific guidance at her disposal that says that I am barking up the wrong tree. Indeed, the hon. Member for Wirral, West can probably enlighten me in advance of any such advice.

Stephen Hesford: The hon. Gentleman is applying himself to the wrong issue and has answered his own question. The provision is attached to the guiding mind of the institution and the offences are designed to ensure that those who guide an institution—the directors, for example—have proper lines of supervision as well as procedures in place to prevent their staff from doing exactly what the offences are designed to prevent them from doing.

David Heath: I understand the hon. Gentleman's point, but the institution, rather than an individual within it, which applies even to those who form its board of directors, will be guilty of an offence.
 However, the hon. Gentleman's point partly answers that made by the hon. Member for Surrey Heath. For the purposes of prosecution, it will have to be shown that either a deliberate attempt to mislead or a reckless disregard for whether a statement is correct is the responsibility of a senior person in the organisation rather than a junior member of staff, to whom the hon. Gentleman referred, who may have made a statement in error. 
 I am still not entirely happy with that, as the responsibility is not explicit, but that may be because I do not know enough about corporate law to understand how the offences are normally framed. Either way, it would be helpful for the Minister to give some indication of how she expects the clause to be interpreted. That would go a long way towards allaying the concerns that the hon. Member for Surrey Heath has rightly raised about the position of a junior member of staff. In doing that, she may be upping the stakes with different institutions' structures and their responsibility to have in place systems that do not allow for the negligent error about which the hon. Gentleman is concerned. 
 I look forward to the Minister's comments. This may be a point to which we have to return in an attempt not to weaken the offence or the grounds for it, but to tighten its application and ensure that everyone understands their responsibilities.

Caroline Flint: We have had a useful debate, and I assure all Members that an institution, rather than an
 individual, will be liable under the clause and clause 34. The sanctions in those clauses will apply only to institutions and the provisions on offences match those in section 366 of the Proceeds of Crime Act 2002. The Government intend that the same circumstances should apply under both pieces of legislation, because they both require financial institutions to respond to customer information orders. The provisions should be identical to avoid any confusion or different interpretation of the two laws. I am satisfied that the clause makes that position clear.
 Under subsection 3(a), a financial institution will be guilty of an offence if it makes a statement that it knows to be false or misleading—that is, it deliberately provides false or misleading information. That is straightforward. Under subsection 3(b), it will be guilty of an offence if it recklessly makes a statement that is false or misleading. If a financial institution complies with an order, following correct procedures and all legal requirements regarding verification of information, for example, yet it later transpires that, despite those measures, the information was false or misleading, it will not be guilty of an offence. 
 We do not consider that there is any doubt about the effect of the clause or the circumstances in which financial institutions are guilty of an offence, so there is no need for an amendment. As my hon. Friend the Member for Wirral, West said, a company may be held liable by its directors. The prosecution would have to prove that the institution was acting recklessly. The same offence could apply to environmental protection, for example. 
 We are not establishing a new offence; it is covered by the Proceeds of Crime Act 2002. Given the nature of the debate and the banking industry's engagement with the Bill as well as the serious safeguards when pursuing a customer information order and, for that matter, an account monitoring order, there would be an onus on the banks to ensure that any information that they had passed on was not left to junior clerks, but that they had sufficient safeguards in their organisations to ensure that they could stand by the information they provided.

Nick Hawkins: I hear what the Minister says—we understand that such an offence would be committed only by the institution. The point that the banking unions were making to me and other members of the all-party committee on insurance and financial services is that junior members of staff worry about the burdens on them. I see the Minister nodding, so she understands my point. Pressures are created if junior members of staff know that a mistake that they might make could lead inadvertently to their bank being prosecuted.
 I shall not pursue the matter further, although we shall return to it when we discuss other amendments. We have expressed worries on behalf of financial institutions. As the Minister is aware, several matters raised in another place by my noble Friend Viscount Bridgeman were inspired by the British Bankers 
 Association. It is not as though the Government can say that they are taking the financial institutions with them each step of the way. The institutions are worried that the Bill is too wide in its application and too draconian. However, I beg to ask leave to withdraw the amendment. 
 Amendment, by leave, withdrawn. 
 Clause 39 ordered to stand part of the Bill.

Clause 40 - Account information

Question proposed, That the clause stand part of the Bill.

David Heath: I have a simple question. I understand how the Scottish parts of the Bill relate to the English. This part relates to banking transactions in England and Scotland, but there are not separate incorporation banks working in both jurisdictions. Does anything in the Bill restrict the requests of the procurators fiscal to only those transactions that take place in Scotland, as opposed to a financial institution working in Scotland that also works elsewhere and transactions that may take place elsewhere? I am not sure that that is the case.
 I hope that I am making myself clear to the Minister. As I understand it, there is no territorial restriction on the English, Welsh or Irish parts of the Bill, save for the italic title above clause 37. I am not clear whether there is a restriction on the position of the procurators fiscal and Lord Advocate in respect of Scotland or the Secretary of State and prosecuting authorities in respect of England and Wales.

Caroline Flint: The clause is the Scottish equivalent to clause 35. It fulfils the same function as that clause in the rest of the United Kingdom, making provision when needed to reflect Scottish procedures, such as that in respect of political orders made by the procurators fiscal to a sheriff. I will follow up the question and give the hon. Gentleman a fuller answer over the next few days.
 Question put and agreed to. 
 Clause 40 ordered to stand part of the Bill. 
 Clause 41 ordered to stand part of the Bill.

Clause 42 - Offence of disclosure

Nick Hawkins: I beg to move amendment No. 149, in
clause 42, page 24, line 23, after 'institution', insert 
 'improperly and deliberately or recklessly'.

Alan Hurst: With this it will be convenient to discuss amendment No. 150, in
clause 42, page 24, line 23, after 'discloses', insert 
 'causing subsequent difficulty in proceedings in the UK or elsewhere'.

Nick Hawkins: The amendment deals with an issue that I raised earlier. For the avoidance of doubt, we seek to bring into the Bill the matter of the guilty mind—the mens rea. It should be made clear that an offence committed by a financial institution would have to be dealt with on the basis that there had been a
 deliberate or reckless act. There is no such restriction in the clause. In respect of the clause that we debated previously, the Minister was at least able to refer to words that made that reasonably clear, and we seek only to introduce an avoidance of doubt provision. We want to include ''deliberately or recklessly''.
 Amendment No. 150 would deal with a slight variant of a similar point. There must be consequences, such as a financial institution facing criminal prosecution, for there to be an offence. Surely the prosecution would have to establish that there had been difficulty caused in proceedings, either in the UK or elsewhere. Returning to first principles of the law, if no harm has been done and there are no adverse consequences, why should a financial institution face prosecution? 
Stephen Hesford rose—

Nick Hawkins: I will give way to the hon. Gentleman in a moment. Before I do, perhaps I may elaborate briefly.
 In civil law—a different field—if a party is at fault they would normally have to pay damages only if they were seen to have caused some financial loss or other damage. A court might, even in contempt proceedings, make an order that a party that caused the problem should pay what are called the costs thrown away. Normally, in most areas of the law, some adverse consequence should be shown—for example, before a criminal prosecution or before any damages are awarded in civil cases. If no harm is done, why should there be a prosecution? I hope that the Minister understands the serious point we are making.

Stephen Hesford: I am obliged to the hon. Gentleman for giving way. He is generous in debate.
 On amendment No. 150, the hon. Gentleman referred to ordinary, general principles and asked whether those ought to apply. One would not know in advance whether damage would be caused down the line. If, by the time somebody was prosecuted, it turned out that no damage had been caused, that would be substantial mitigation and it would go towards the correct penalty. If the information that no damage had been caused came sufficiently early in proceedings, it might affect the decision on whether to prosecute. Those are the ordinary, general principles. With respect, his amendment is unnecessary.

Nick Hawkins: I understand the hon. Gentleman's point about the Bill remaining unamended. No doubt, the decision on whether to prosecute might be influenced if it were shown that there had been no damage, but there would be no guarantee that there would not be a prosecution, even if no damage were caused. There would be nothing in the Bill to say, ''Do not prosecute if no damage was caused''.
 The hon. Gentleman and I take a different view on the matter. He is right to say that if there were to be a prosecution and the defence was saying, ''Well, there was no consequence from this—there was no damage,'' that would be a point put in mitigation. We stick to our approach, however, which is that it would be far better if it were clear in the Bill that if no damage is caused and there are no adverse 
 consequences to the mistaken information supplied, there should be no question of prosecution. If that were in the Bill, institutions and their staff, who worry about such things, would be better protected.

David Heath: There are two amendments in the group. The first relates to a matter that we have already dealt with, and I suspect that the Minister's answer will be the same.
 I do not agree with the hon. Member for Surrey Heath on his second amendment. In fact, I am slightly alarmed by it. We are talking about not only an inadvertent or incorrect disclosure, but blowing the gaff on the investigation. It is impossible to work out what the difficulties in the proceedings would be because, as a result of the disclosure, the action that would have been taken might not go ahead. Therefore, the financial transaction that might have been made, and that might have produced substantial evidence in pursuit of an investigation, would not take place. One cannot prove that, however. It is impossible to do so, because it means proving a negative in the absence of evidence. 
 Although I do not like absolute offences, in this instance there are equivalents elsewhere in law. It must be made absolutely clear that proceedings on the basis of disclosure of the fact that an investigation is taking place, and therefore the jeopardising of it, should not rely on the extent of the damage and proving the offence. I think that the hon. Gentleman is wrong in this instance.

Caroline Flint: I welcome the views of the hon. Member for Somerton and Frome and those of my hon. Friend the Member for Wirral, West. They have demonstrated the problems with the amendments. The clause would ensure that financial institutions did not disclose the existence of a customer information or account monitoring order, or a request for banking information made under article 2 of the protocol, to any party in any circumstances. Clause 42(3)(a), (b) and (c) define what information should and should not be provided. We had a debate about those involved in the process, and we have to be clear on this aspect of it. It would totally undermine the point of seeking the customer information and account monitoring orders if we alerted a potentially dangerous criminal to our activities. To that end, we cannot accept the amendments.
 The provision is designed to implement article 4 of the protocol, which requires member states to 
''take the necessary measures to ensure that banks do not disclose to the bank customer concerned or to other third persons that information has been transmitted to the requesting State in accordance with Articles 1, 2 or 3 or that an investigation is being carried out.''
 Committee members have made the point that it is often not clear at the outset what information may be pertinent to a later inquiry. We know how sophisticated, technical and complicated financial information is. 
 We are satisfied that the drafting, which will impose a specific ban on disclosure, represents the most appropriate and effective means of implementing the protocol obligation. Under the protocol, it does not 
 matter whether or not the disclosure is deliberate or reckless. Disclosure must be prevented. If we are not clear about the matter, people could form their own interpretation of what is reckless or deliberate. We need clarity. Nor can we restrict the liability to when disclosure causes difficulty in UK proceedings. 
 It is imperative that information is not disclosed that could hinder overseas proceedings, or indeed an investigation here or elsewhere. For example, if a bank employee informed a customer who was a suspect in a money laundering investigation that their account was subject to a monitoring order, that would negate the purpose of the monitoring—obtaining evidence of the offence—as they would know not to use the account during the monitoring period. It is essential that the Bill has strong and effective safeguards, but also that we are clear about the fact that there is no room for misunderstanding. That would be particularly beneficial to those serving in banks who may be asked to get involved in such an order and gaining information.

Nick Hawkins: There is a difference of opinion between myself and the Minister and the hon. Member for Wirral, West—and, in relation to one of our amendments, there is a difference of opinion with the hon. Member for Somerton and Frome.
 I will not pursue the matter further this morning. We have made our point, and it is useful to have some of the Minister's assurances on the record. Therefore, at this stage, I beg to ask leave to withdraw the amendment. 
 Amendment, by leave, withdrawn. 
 Clause 42 ordered to stand part of the Bill.

Clause 43 - Information about a person's bank account

Nick Hawkins: I beg to move amendment No. 151, in
clause 43, page 25, line 43, at end insert— 
 '(8) Where any bank or financial institution contacts any of its customers holding a bank or financial account or accounts, they shall not request customer information alleging they require it for legislative or investigative reasons when they actually want it for marketing'.
 This is my reassurance to the hon. Member for Wirral, West and other Committee members that, despite my background, I will not always be putting forward proposals on behalf of banks and financial institutions, because there are times when we would all accept that they go too far. 
 With regard to another recent piece of legislation, we had a debate with the Minister's predecessor, the hon. Member for Coventry, North-East (Mr. Ainsworth), about the problems that some banks and financial institutions have caused to constituents throughout the country. They have misused some of the provisions of the proceeds of crime legislation to enable them to get information by using that legislative framework as a cloak when they actually wanted the information not for the 
 investigation or prevention of crime but for marketing reasons. 
 There was such a case in my constituency. It involved a local charity—I am sure that all Members have local charities in their constituencies. This charity—the Windlesham United Charities and Poors' Allotments—has done a great deal of valuable work in my constituency over many years. The secretary to the trustees of the charity is a lady who is well known for her good work in my constituency. Her name is Doris Christie, and she has been honoured for her charity work. She saw me at one of my surgeries to draw attention to the fact that the bank with which the charity had an account was asking for information which I, having been the shadow Minister on the proceeds of crime legislation, happily knew went far beyond the legislative requirements. When we finally got to the bottom of things—after much strongly worded correspondence from me—the bank admitted that some of the information that it was seeking about the trustees' personal details went beyond the legislative requirements and was simply required by it for marketing purposes. 
 Therefore, I have had experience of how previous legislation has been working. The hon. Member for Wirral, West and others might recall that when my hon. Friend the Member for Beaconsfield and I were leading for the Opposition on the proceeds of crime legislation, we expressed worries that it might be misused—that it might sometimes be used as a sledgehammer to crack a nut. I have seen a subsequent example of how some of the requirements have been misused. 
 I hope that the Minister will understand that Opposition Members do not always defend everything that banks and financial institutions do. I felt that it might be helpful to introduce a correction into this Bill to make it clear that banks and financial institutions, while they should be encouraged to help the Government, police and prosecution forces generally to investigate crime, must not misuse their powers and start trying to seek information that they use purely for marketing purposes under the cloak of this Bill, the Proceeds of Crime Act 2002, or any other legislation.

David Heath: In a genuine spirit of inquiry, I wonder why the hon. Gentleman tabled this amendment to the clause, which appears primarily to deal with banking transactions outside the United Kingdom, rather than inside it. I wonder whether overseas banks would be more likely to use this ploy than banking institutions in this country.

Nick Hawkins: The hon. Gentleman's last point was one of the things that I had in mind. However, in response to his genuine inquiry, I was in not one or two, but several minds about where to insert the amendment. I was relieved that the Clerk and the Chairman regarded the proposal as being in order and that it was on the amendment selection list. While I may not have chosen the most perfect place in the Bill to insert the amendment, at least it was selected. To that extent, I am pleased to have had the chance to pass on the worries of my constituents.
 If other members of the Committee have not yet experienced such a problem, they will. Small charities are worried about these matters. People who administer them are receiving onerous requests for personal information. While the particular local charity that I have mentioned has been the most obvious case, similar issues have been raised with other hon. Friends who are members of the all-party insurance and financial services group. I hope that the Minister will understand where I am coming from and that she can give me a helpful response.

Caroline Flint: Let me clear up any confusion. When the Bill was discussed on Second Reading, the hon. Member for Surrey Heath expressed worry about alleged practices by some banks when obtaining inappropriate information from their customers, but here is not the place to discuss such matters. I am not sure that they have anything to do with the Bill.
 However, the amendment is listed on the selection list, and I want to clarify a few points. There is no question of a bank or financial institution contacting its customers about any of the requests made under chapter 4. Indeed, they will be guilty of an offence if they disclose the existence of a request or an investigation, let alone if they disclose it to the customer in question. The Bill does not create a new obligation on banks about the records that they hold about its customers. Its purpose is to find out information about an existing account, pursuant to criminal investigations, not to find out new information about the individual. It is about gaining access to a person's financial records. That is the purpose of the customer information and account monitoring orders. If banks were to contact their customers about anything else, they would be guilty of the offence of disclosing the existence of a request for an investigation or of, at least, putting that investigation in jeopardy. 
 To include a provision along the lines of that proposed by the amendment would be inappropriate. Clause 43 regulates outgoing mutual legal assistance requests from the United Kingdom to identify and provide details of accounts that are held overseas. It deals with requests from UK prosecuting authorities to overseas judicial authorities, which they will execute in the way most appropriate to their law. In France, for example, there will be no need to involve banks at all in requests to identify accounts, because it has a central register of bank accounts. While I appreciate that the hon. Gentleman has more general worries, I hope that he will withdraw the amendment in light of my comments.

Nick Hawkins: The Minister has been helpful. I beg to ask leave to withdraw the amendment.
 Amendment, by leave, withdrawn. 
 Question proposed, That the clause stand part of the Bill.

David Heath: I have a question for the Minister. I had intended to table an amendment about the matter, but I forgot. The term used for requests outside the United Kingdom to this country is ''financial institutions''. In the case of requests from the United Kingdom to other participating countries, the term is ''banks''. Why is
 there such a difference? Are we not applying an artificial restriction to the financial institutions from which we can request information? As we know, financial institutions take many forms, which is why we have them in our part, as it were, of the Bill. Many companies that operate in a similar way to banks in other countries may be differently incorporated.
 The Minister mentioned France, and it is interesting that there is a central collection of banking information there. It occurred to me that some of the major ''banks'' in France are in fact mutual societies and credit unions. I do not know whether they would come under the definition of a ''bank'' as specified in clauses 43 and 44. My question is, why do we use the term ''financial institutions'' when we talk about those in this country, but ''banks'' when we talk about the same thing in other countries? That does not seem consistent. Indeed, it is potentially dangerous in terms of a challenge if information from another country comes from a financial institution that is not a bank.

Caroline Flint: I thank the hon. Gentleman for raising that question. It needs to be answered. I shall ask officials to find an answer, and shall write to him before we finishing our proceedings.

David Heath: I am grateful.
 Question put and agreed to. 
 Clause 43 ordered to stand part of the Bill.

Clause 44 - Monitoring banking transactions

Nick Hawkins: I beg to move amendment No. 152, in
clause 44, page 26, line 8, leave out 
 'or justice of the peace'.
 We on these Benches yield to no one in our admiration for lay magistrates. The Minister and other Committee members will be aware that we are constantly trying to promote the interests of justices of the peace, and complaining that the Government have closed so many magistrates courts and moved us away from local justice. However, certain areas of the law have not traditionally been regarded as appropriate for lay magistrates. It is therefore important to state that this particular matter should be dealt with by a sheriff in Scotland, by a judge or resident magistrate in Northern Ireland and by a judge in England and Wales. Despite our admiration and support for JPs, we do not think it appropriate for them to be given this particular power. 
 JPs have a vital function in dealing with a huge number of cases of all kinds, but they deal with those at the lower end of the spectrum of offences. If we are talking about judicial authorities in the UK acting on behalf of the state, it is not appropriate to include JPs.

David Heath: The hon. Gentleman is right to probe the reason why the judicial authority in this instance can be a justice of the peace, because we are talking about an intrusive procedure. It goes beyond a basic warrant, which is the usual ceiling for requests outwith the judicial authority, and in other circumstances only those above a magistrate, such as a circuit judge,
 would become involved. I would be grateful if the Minister made her position known to us.
 There is a time lag or at least an inconsistency in judicial nomenclature between the Home Department and the Department that used to be called the Lord Chancellor's Department. For instance, Northern Ireland has both resident and lay magistrates. The latter are the equivalent of the justices of the peace in England and Wales, and yet they are not to have the power to make the request. That does not seem entirely logical. It would have been logical before the Justice (Northern Ireland) Act 2002, but there is now the creation of the lay magistrates, although they do not yet exist.

Alan Hurst: Order. I am sure that the hon. Gentleman would like to redirect himself back into order by addressing the amendment.

David Heath: Yes. I was exploring the meaning of the term ''justice of the peace'' in the context of the clause, Mr. Hurst, and how that term is understood in the various jurisdictions of the United Kingdom. I hope that I kept myself in order, but because there is a serious danger of straying beyond the terms of the amendment, I shall sit down and listen to what the Minister has to say.

Caroline Flint: The effect of the amendment would be that outgoing requests for account monitoring orders could not be dealt with in the magistrates court. We do not accept the amendment. The Government have made the point under other clauses that, in general, we consider the magistrates court entirely capable of considering and dealing with requests for mutual legal assistance, both incoming and outgoing. Magistrates courts have many years of experience in mutual legal assistance, and we have not heard any strong arguments for changing this practice.
 There is no need to restrict outgoing requests to monitor accounts to higher courts; such requests are just another, albeit specialised, type of mutual legal assistance request. Magistrates courts can deal with outgoing requests under clause 7 and, in the interests of consistency, the same approach should be adopted here. Furthermore, it is entirely possible—and likely—that a request for monitoring will involve a request for other types of mutual legal assistance, such as the provision of historical information about the account. Those types of request are not new. The same court should be able to deal with all aspects of the request. 
 It should be noted that the majority of requests under the clause will be issued by designated prosecuting authorities themselves—that is, the Crown Prosecution Service, Her Majesty's Customs and Excise and the Serious Fraud Office. 
 The position in Scotland and Northern Ireland reflects normal existing mutual legal assistance arrangements. The magistrates court will act on behalf of prosecuting authorities, such as the Financial Services Authority, that cannot issue their own requests at present as they are not designated. We 
 will consult further, particularly on the question of Northern Ireland. The Court Service and the Northern Ireland Office have been consulted.

Nick Hawkins: I hear what the Minister says. I am grateful to the hon. Member for Somerton and Frome; he and I were involved earlier this week in a fascinating debate on a statutory instrument that dealt with what used to be called the Lord Chancellor's Department. The new Minister there got into terrible trouble with the hon. Member for Thurrock (Andrew Mackinlay) on the issue of lay magistrates in Northern Ireland. The hon. Member for Somerton and Frome and I were particularly conscious of his point—however, I must keep within order, too.
 I hope that the Minister will realise that we are making a serious point. There is, of course, a judgment call to be made; the Government have come down on one side of the line and the hon. Member for Somerton and Frome and I are on the other. However, at this stage, I shall not pursue the matter further. I beg to ask leave to withdraw the amendment. 
 Amendment, by leave, withdrawn. 
 Clause 44 ordered to stand part of the Bill. 
 Clause 45 ordered to stand part of the Bill.

Clause 46 - Interpretation of Chapter 4

Nick Hawkins: I beg to move amendment No. 100, in
clause 46, page 27, line 7, leave out paragraph (a) and insert— 
 '(a) an offence which requires a prison term of 10 years or more, or'.
 Our amendment would replace reference to the protocol with a provision saying that ''serious criminal conduct'' was any offence carrying a sentence of 10 years or more. The Minister will be aware that the issue was debated in another place on 27 January. That debate is in column GC 144 and thereafter in Hansard in another place. My noble Friend Viscount Bridgeman made it clear that he was probing the issue, and we do the same again today. It would be helpful to know which other countries follow the guidelines in the protocol. Have the guidelines been amended? Could they be? Would it be helpful to have those guidelines listed in the Bill for the sake of clarity? 
 At the moment, ''serious criminal conduct'' is simply defined as an offence under the 2001 protocol or as 
''an offence specified in an order made by the Secretary of State''.
 We do not think that that is sufficient. The amendment would put in 
''an offence which requires a prison term of 10 years or more''.
 We might have chosen ''five years or more''. There was some discussion in another place about whether 10 years was the right level. There were some offences that ought to have been included but would not fall into that category. We wanted to probe the matter further, because we did not think that it got a tremendously thorough answer from Lord Filkin, who spoke for the Government. I hope that the Minister will respond to that. 
 Amendment No. 143, which was tabled by the hon. Member for Somerton and Frome, seeks to delete paragraph (b).

Alan Hurst: It is in the next group.

Nick Hawkins: I am sorry. I am working from a slightly out of date selection list.

Stephen Hesford: Does the hon. Gentleman accept that the wording of his amendment is rather strange? It reads
''an offence which requires a prison term of 10 years or more'',
 which means that someone would have to get 10 years or more. It does not say, ''An offence punishable by 10 years or more'', which would be the more general way of putting it. Even if there were some substance in what he was saying, does not his wording make it more difficult for the Committee to accede to the amendment?

Nick Hawkins: I understand the hon. Gentleman's point. The wording of our amendment in another place was
''an offence which carries a prison term of 10 years or more''.—[Official Report, 27 January 2003; Vol. 643, c. GC 144.]
 Perhaps that form of words would have been better. I have said that I want to probe the matter. The hon. Gentleman understands that and I am sure that the Minister does, too. We do not suggest that the wording of the amendment is perfect. There is, however, a serious point, which is to probe whether we should have the offences set out in the Bill. I hope that the Minister will understand why we wanted to probe that matter. 
 I shall say no more, and listen with interest to the Minister's response.

Caroline Flint: Clause 46, as drafted, defines serious criminal conduct in terms of offences listed in article 1(3) of the protocol. I stress that there are no guidelines. In fact, there is an obligation. That is the same for all states. The relevant offences are those punishable by a four-year custodial penalty in the requesting state and two years in the requested state, or offences referred to in the Europol convention or the convention on the protection of the European communities' financial interests. Article 1(3) sets out the circumstances in which member states are expected to assist. All member states are therefore bound by the same rules in this respect, and they are under the same requirement to assist in relation to the same kinds of crime.
 As I explained in previous groups of amendments, we considered that it was simpler to include a definition covering all of the circumstances than to list them all repeatedly in chapter 4. For us to set a different threshold would place the UK in breach of the protocol, which would mean that we would not be considered to have implemented it. Thus we would be going against our international obligations. If we did that, we could not expect other countries to comply with any requests for assistance that we made under the provisions of the protocol. As I have previously stressed, the protocol is an essential tool in the fight against international crime and will bring considerable benefits to our own investigations and prosecutions. 
 A crime with a maximum sentence of 10 years is undoubtedly serious, but there are other serious offences that would not meet the test, for which we might wish to be able to offer, or seek, that kind of assistance. Customer information orders will be helpful in tracing and locating criminals and terrorist groups. For example, under the Child Abduction Act 1984, child abduction—taking a child out of the UK without consent—attracts a maximum sentence of seven years. Banking information might be of assistance in locating a suspect. Some offences—for example, possession of a dangerous article on an aircraft, including explosives such as bombs, grenades and firearms—are classified as terrorist offences and attract a maximum sentence of five years. Under the Computer Misuse Act 1990, the unauthorised modification of computers and their unauthorised access with intent both attract maximum sentences of five years. That is one example of crime without borders that could be the subject of an international investigation. 
 The amendment would also rule out seeking or providing assistance in investigations into benefits from crime in cases in which the minimum sentence is less than 10 years. Many other offences in that category might give rise to such an investigation. I hope that that reassures the hon. Gentleman and clarifies the situation. I ask him to withdraw the amendment.

Nick Hawkins: I beg to ask leave to withdraw the amendment.
 Amendment, by leave, withdrawn.

David Heath: I beg to move amendment No. 143, in
clause 46, page 27, line 9, leave out paragraph (b).

Alan Hurst: With this it will be convenient to discuss the following:
 Amendment No. 101, in 
clause 46, page 27, line 12, at end insert— 
 '( ) An order under subsection (3) shall be made by statutory instrument and may not be made unless a draft of the statutory instrument containing the order has been laid before and approved by a resolution of each House of Parliament.'.
 Amendment No. 102, in 
clause 46, page 27, line 12, at end insert— 
 '( ) No order shall be made under subsection (3)(b) by the Secretary of State until a draft of that order has been laid before and approved by resolution of both Houses of Parliament. 
 ( ) No order shall be made under subsection (3)(b) by the Scottish Ministers until a draft of the order has been laid before and approved by a resolution of the Scottish Parliament.'.
 Amendment No. 64, in 
clause 50, page 29, line 40, leave out from 'Ministers' to 'a' in line 41 and insert 
 'may only be made if a draft of the statutory instrument has been laid before and approved by'.
 Amendment No. 65, in 
clause 51, page 30, line 49, at end insert— 
 '(2A) An order made under subsection (2) shall be made by statutory instrument and may only be made if a draft of the statutory instrument containing the order has been laid before and approved by a resolution of each House of Parliament'.

David Heath: Amendment No. 143 would leave out clause 46(3)(b). This part of the Bill deals with an extension of the offences that are relevant to it, and it does that by means of a process that leaves something to be desired because there is a democratic deficit. It suggests that the Council of Ministers can determine that. It will then be pushed through the House of Commons by order under the negative procedure. It is unsatisfactory to add new offences that will have the implication of considerable intrusion into the private affairs of individuals in this country without parliamentary scrutiny. Especially if the decisions under the Council are taken by majority voting in this area—which may well be the case in the foreseeable future—it is possible that the House will find itself bound by a decision to which UK Ministers were not in agreement, that it will have the minimum scrutiny of a revised list of offences that does not appear in the Bill or in the protocol to which it directly applies, and that it will not have the opportunity—in real terms—to debate the matter and to identify whether we are content that such offences should be recognised for the purposes of this part of the Bill.
 That is an inadequate procedure. The Minister can help the Committee by taking its members through, stage by stage, how she envisages the process would take place. At present, I am not persuaded that this gives sufficient opportunity for Parliament to determine the rights and wrongs of that which would apply to British citizens.

Nick Hawkins: I entirely understand what the amendment of the hon. Member for Somerton and Frome addresses, and I hope that, as he suggests, the Minister will take us through the matter stage by stage.
 My party's amendments that are grouped with the hon. Gentleman's amendment are Nos. 101, 102, 64 and 65. Amendment No. 101 is our usual amendment—we often table it—to secure the affirmative resolution procedure. We think that it is important to have parliamentary scrutiny of these matters, and I hope that, on reflection, the Minister will agree that an affirmative resolution is appropriate. Amendment No. 102 requires that the Secretary of State—or a Scottish Minister—gives approval. Amendments Nos. 64 and 65 are consequential amendments that would take the same thing forward into clauses 50 and 51. 
 It would be helpful for the Secretary of State—or a Scottish Minister in Scotland—to give approval at an early stage, and we regard the affirmative resolution procedure as extremely important. We do not want these things going through Parliament on the nod. I hope that the Minister will respond to the amendment of the hon. Member for Somerton and Frome, and that she will take our amendments seriously, in the spirit in which we move them.

Caroline Flint: Amendments Nos. 101 and 102 would mean that any order made by the Secretary of State or Scottish Ministers to designate the further offences for which customer information orders may be sought will be subject to affirmative rather than negative resolution.
 Clause 46(3) provides that the order-making power 
 will be used 
''for the purpose of giving effect to any decision of the Council of the European Union under paragraph 6 of that Article.''
 That means that if the EU member states decide that the scope of article 1 of the protocol should be broadened to cover more crimes, as provided for in article 1(6), the UK could broaden the assistance that it could provide without passing new primary legislation. The provision in article 1(6) was included in the protocol as a practical measure to avoid the need for an amending convention. A decision to broaden the scope of article 1 would be taken only in the light of experience of operating the provision, and the decision would be subject to parliamentary scrutiny through the usual scrutiny processes. 
 Customer information orders will be a useful tool, not only in tackling financial crime, but in tracing and locating criminals and terrorist groups that might be involved in committing all sorts of other crimes. We think it right that the Secretary of State should have the power to widen the circumstances in which they may be sought in future. 
 Amendment No. 65 also deals with secondary legislation, but in relation to the whole of part 1. Its effect would be to require all orders made in relation to part 1, including orders to designate participating countries, to be subject to affirmative resolution. We cannot accept that amendment, or amendment No. 143. Making all orders under part 1 subject to affirmative resolution would be excessively burdensome and would result in inappropriate use of parliamentary time. Negative resolution procedure is generally held to offer an appropriate level of parliamentary scrutiny for this type of legislation. It does not rule out the possibility of a debate, but it saves unnecessary debate on matters that simply do not merit it. 
 An example of a case in which the order-making power would be used is clause 7(5), which permits the Secretary of State to designate prosecuting authorities to make requests for obtaining evidence abroad. An order designating prosecuting authorities was made by negative resolution under the 1990 Act. 
 All the order-making powers in the Bill have been subject to the scrutiny of the Select Committee on Delegated Powers and Regulatory Reform. In response to concerns expressed by that Select Committee about the power to designate participating countries, the Government introduced amendments to require the affirmative resolution procedure for designating new countries, but with an exception for countries that are members of the European Union. There are parallel arrangements for regulations made at Westminster and by the Scottish Parliament. Apart from those concerns, which we reacted to, the Select Committee was content with the level of delegation of powers across the Bill. 
 The reason for the exception is that we will designate the 10 new member states, following their accession to the EU, to participate in the measures in 
 part 1. All went through an extensive assessment before being accepted for membership and must implement the EU instruments that the Bill implements. As member states, they have effective judicial systems and are signatories to the European convention on human rights, as, of course, are all existing members of the EU. It would not be appropriate or necessary to put up further barriers to the application of the provisions to those countries. 
 We think that, in the circumstances, there is opportunity for parliamentary scrutiny under present procedures, which do not entirely rule out parliamentary debate. In line with other order-making powers of Parliament, we think that a negative resolution procedure will suffice.

David Heath: One must always respect the care and consideration that Ministers take not to overburden the House of Commons with scrutiny, but I think that the case is not made. The amendments deal with the substantial issue of what many of us feel is an inadequate process of scrutiny. I do not wish to pursue the matter at this stage, but I have no doubt that we will return to it at a later stage in the Bill's consideration. I beg to ask leave to withdraw the amendment.
 Amendment, by leave, withdrawn. 
 Question proposed, That the clause stand part of the Bill.

David Heath: I shall ask the Minister some questions, but I do not expect her to have the answers immediately. They are similar to the questions that I asked about the correlation between jurisdictions in England and Scotland.
 On the definition of ''financial institutions'', I am assuming that any financial institution that carries out any business that is in the regulated sector in the United Kingdom is caught by the definition, irrespective of its country of incorporation or where its main business is transacted, and that it is not possible for a company to pray in aid, as a cover for any financial transactions, the domestic law of the country of its incorporation in order to protect its customers' confidentiality. 
 My second point is to ask what arrangements have been put in place to deal with similar legislation for the various territories for which Britain has international responsibility, but which are not under UK jurisdiction. In particular, I am thinking of the British overseas territories and the Crown territories. If I were an international criminal, I would be tempted to use one of the island territories, rather than a UK mainland financial institution, as my preferred route for the transfer of money. 
 I would like to think that the UK was taking its international responsibilities for overseas territories seriously, in particular for those situated in the Caribbean, which have significant financial institutions, and for the bailiwicks and others of the Crown territories. I do not expect the Minister to have a chapter-and-verse response to hand. She might be able to provide an instant reply, which would be 
 splendid news, but if she cannot, I would be grateful if she wrote to me.

Caroline Flint: The answer to the hon. Gentleman's first question is yes. On his second question, the protocol does not apply to overseas territories or Gibraltar, the Channel Islands or the Isle of Man. They can all join it, but that is their decision. I have listened to the hon. Gentleman's points about accounts of general activities, and I am sure that my officials are listening too.

David Heath: I am a little alarmed by that, and I hope that the Minister will have discussions with both Treasury and Foreign and Commonwealth Office colleagues about it. It is time that we took seriously our responsibilities for overseas territories, especially in the case of Gibraltar, which is part of the territory of the European Union, so it should have parallel legislation. If it does not, there should be an exchange of views between the Foreign and Commonwealth Office and the Chief Minister of Gibraltar.
 Clause 46 ordered to stand part of the Bill.

Clause 47 - Transfer of uk prisoner to assist investigation abroad

James Paice: I beg to move amendment No. 103, in
clause 47, page 27, line 28, leave out 'competent' and insert 'relevant judicial'.
 I knew it would be worth coming to the Committee this morning. I shall begin by adding my congratulations to the Minister on her appointment. I commend her on the way in which she has fulfilled her responsibilities in the past two hours or so. I have just seen the clock, and this is the worst possible time to be moving an amendment. I shall endeavour to speak to it briefly so that I do not have to try to remember where I was in the middle of a sentence at 2.30 pm. 
 Amendment No. 103 relates to chapter 5 of the Bill, which is about the transfer of prisoners abroad. There are more significant issues to raise later, so this is simply an exploratory amendment on the definition of the term ''competent''. We have suggested that that should be deleted and that the Secretary of State, pursuant to an agreement with the judicial authority of a participating country, should issue the warrant. 
 I recognise from the debate in the other place that in the UK not all the competent authorities will be judicial authorities. Customs and Excise, the Crown Prosecution Service and the Prison Service could be described as competent authorities. I readily accept that perhaps the word ''judicial'' is not appropriate, but I should like the Minister to explain a little more about what the Government might think is a competent authority from abroad. Will it be a body listed in a bilateral arrangement? Will there have to be any previous arrangement about which are the competent authorities in participating countries, and certainly in the country that is requesting the transfer of a prisoner, or will a decision on whether a body is competent be made by our Government on each individual occasion? 
 I am concerned that some measures in the Bill are tending to assume that the body abroad, which will be making various requests—in the context of this clause, it will be the request for a transfer of a prisoner—will be the right authority. We must bear in mind the types 
 of countries with which we may be having such a relationship. 
 It being twenty-five minutes past Eleven o'clock, The Chairman adjourned the Committee pursuant to the Standing Order. 
 Adjourned till this day at half-past Two o'clock.